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Pennsylvania NatGas Production Posts First Quarter Increase

Unconventional natural gas production in Pennsylvania continued to increase during the first quarter, when it was 1.306 Tcf, or 1.7% higher than it was during the same period last year, according to a report released Monday by the state's Independent Fiscal Office (IFO).

First quarter production also increased slightly from the 1.274 Tcf reported by shale drillers in 4Q2016.

The latest gains come after a low of just 503 new unconventional wells were drilled in the state during 2016, down from 785 in 2015 and a peak of 1,370 in 2014. A backlog of drilled but uncompleted (DUC) wells heading into 2016 helped producers in the state increase production during a year in which dry gas production fell across the Lower 48 for the first time since 2005.

DUCs and older wells again helped during the first quarter, when the IFO said production gains came from wells spud in 2015 and 2016. Wells drilled in those years comprised nearly a quarter of total production during the period, according to the report, which uses data compiled by the state Department of Environmental Protection. The number of producing wells increased to 7,678, up from 7,109 in the year-ago quarter.

Year/year unconventional natural gas production increased by about 11%  to 5.1 Tcf in 2016. From 2011 to 2016, production volumes increased at an average annual rate of 37.1% during a time when Pennsylvania became the nation's second largest gas producing state. During that six year stretch, the number of producing wells in the state grew at an average annual rate of 32.3%.

While first quarter production growth was more moderate than it has been in the past, permitting, production and drilling are all expected to increase this year as demand rebounds and prices firm following the worst of the 2014 commodities downturn. After declining to its lowest point in 2Q2016 at 72, new horizontal wells spud have increased in each of the last three quarters, peaking during that time at 178 in 1Q2017, according to the IFO. DUCs were up slightly as well during the quarter to 802, compared to 792 at the same time last year.

Susquehanna, Washington, Bradford and Greene are currently the top-four producing counties, accounting for two-thirds of the state's year-to-date natural gas production.

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